Document

Exactly how much DeMaio profited from the transaction has been a point of curiosity around City Hall since he ran and won a seat on the City Council four years ago. DeMaio hasn’t been shy about spending his own money on political causes, including the $776,000 that he has poured into the mayor’s race so far.

DeMaio said he released the returns as he announced a transparency plan that calls for posting city contracts online, full disclosure of all campaign contributions and posting employee pay and pensions online. He also challenged his opponent, Democratic Rep. Bob Filner, to release his tax returns as well. Filner refused to do so ahead of the June mayoral primary, citing concerns that it would reveal details about his ex-wife’s finances.

“Today I’m releasing five years of my personal tax returns, setting the example as I pledge to create the most open and transparent city government in the nation,” DeMaio said. “The public has a right to know what is going on at City Hall and San Diego’s next mayor has to lead by example. Congressman Bob Filner has repeatedly rejected transparency. He has failed the transparency test even while he’s tried to hold others to high standards.”

In a statement, Filner questioned DeMaio’s commitment to open government by noting he refuses to disclose large blocks of his personal schedule or his meetings with special-interest groups.

“Today’s publicity stunt by DeMaio represents another non-response to the challenge by (Assemblyman) Nathan Fletcher over six months ago to release all tax returns for both his household and his businesses,” Filner said. “Although today he released his personal income tax returns, he has yet to release those of his life partner or his businesses.”

Filner said he would release his tax returns if DeMaio releases his household and business tax returns, including his partner, Johnathan Hale.

K.B. Forbes, DeMaio's campaign spokesman, said the congressman is avoiding the issue. "The least the Congressman can do is show the public his tax returns, just like Carl DeMaio has done," he said. "This election is not about Carl DeMaio's partner or Bob Filner's fiancée and ex-wives."

DeMaio’s career path began before he graduated from Georgetown University with a degree in international politics and business. In 1994, in his second year of college, he began working full time for the Congressional Institute, a nonprofit organization with strong ties to Newt Gingrich that holds retreats for Republican members of Congress. DeMaio put together staff training on strategic planning and government oversight, among other things.

In 1998, DeMaio decided to branch out on his own with a performance-based budgeting conference for public agencies that would lead to more and more conferences. Two years later, he incorporated The Performance Institute. Soon, he said private companies began asking if they could send employees to his conferences.

In 2002, DeMaio launched American Strategic Management Institute for corporate executives. He said each of his companies had the same budgeting philosophies but said ASMI was more lucrative because he charged more. The companies had a combined annual revenue of about $15 million by 2007 about half of which came from government contracts, he said.

DeMaio’s critics, including labor unions, often note he made his money by securing no-bid government contracts. From 2000 to 2007, the Performance Institute collected nearly $2.8 million in contracts from several federal agencies — including the departments of commerce, defense, agriculture and homeland security — according to usaspending.gov. About 12 percent, or $334,000, was listed as noncompetitive bids.

According to DeMaio’s 2007 tax return, he had an annual salary of $111,000 as head of both companies. He also sold the companies to Thompson Publishing that year before running for City Council. Thompson Publishing filed for bankruptcy three years later, but both of his former companies continue to operate today.

DeMaio said the companies were sold for $6 million, but he didn’t get all of that money because of a profit-sharing agreement with his management team. His tax return shows his portion of the sale at $4 million with transaction costs — broker, accounting and legal fees — of about $1.5 million. That left DeMaio with a profit of $2,489,582 on the deal. He paid $400,000 in taxes that year.

DeMaio said he couldn’t release the purchase agreement because it would reveal proprietary information that he no longer owns. He said the terms of the agreement barred him from revealing details of the purchase until five years after the sale, a prohibition that expired this month.

DeMaio provided the form 1040s he filed from 2007 through 2011. Reporters were allowed to peruse his complete tax records, including schedules that detailed his investments. For example, the 2011 return shows he sold about $79,000 worth of stock in companies such as Microsoft, General Electric and Verizon.

DeMaio’s transparency plan would require candidates to list every campaign contributor. The current rules call only for the disclosure of contributors who give $100 or more. DeMaio has listed all of his contributors throughout the mayoral race.

The plan also calls for city contracts worth $25,000 or more and employee compensation be posted online. The identity of employees wouldn’t be made public, but their compensation would be broken down by base pay, overtime, specialty pays and bonuses.